rdp to the server (windows server 2003) navigate to the folder "E:\share\" and the folder is called "username" but from my windows 7 machine if i browse to \\server\share\ there is no folder called username, it's called "my documents"

That's not a bug, that's the normal behaviour.
if you browse the share from the client it displays the "friendly" name instead of the NTFS folder name, since Windows recognises this is the folder which is the target of your redirection policy.

Can be annoying for admins, but not usually for users.

Try accessing it via a different share name (either share the same folder with a different name or share a folder one level above it). That ought to enable you to browse to the right place if you need to.

found out this is to do with the desktop.ini file in the users "my documents", question now is how do i prevent the desktop.ini file from bring created? i could script and schedule the deletion of all files called desktop.ini but would rather the file not be created in the first place....